12 Sep 2022 Samantha McLauren
Terra Classic (LUNC) Soared 250% In September, Here Is Why
Terra Classic (LUNC), or what is left of the LUNA project, which crashed down in May due to its small brother – the TerraUSD stablecoin de-pegging from the U.S. dollar, is seemingly revitalizing after the crash. The reason - a new staking service went live on the Terra Classic chain on Aug. 27, immediately sparking waves of endorsement.
The token surged more than 250% since the start of September to reach a high of $0.000594 per LUNC, with the project spiking 100% in just a couple of days.
The 250% comes just several months after the $40 billion project collapsed in May, pushing the crypto sector into massive price volatility that is still evident. However, traders have ignored the market analysts’ warnings in recent weeks.
LUNC introduces staking
The original Terra chain now offers staking, with a total of more than 610 billion LUNC already staked, which makes nearly 9% of the total LUNC supply leaving circulation. StakingRewards data reveals that staking Terra Classic is giving users an annualized yield of 37.8%, which is one of the highest payouts in the crypto industry to date.
Analysts are considering that the crashed token may spike almost five times since the staking service launch, as the yield percentage may boost LUNC demand even more. Staking also provokes a natural scarcity effect, which could act as yet another boost for the token’s price.
Burning joins Terra Classic
Staking isn’t the only new feature that comes to the Terra Classic chain, as Terra Classic developers have also introduced a token-burning mechanism to boost LUNC’s scarcity.
It turns out that LUNC community member Edward Kim proposed to add a 1.2% transaction tax on LUNC on-chain transactions at the beginning of September, with the tax set to go to a dead address. The result – a burning mechanism that would permanently remove a portion of LUNC’s supply from circulation.
However, there is such a mechanism already working, with data from LUNC Burner showing that over 3.6 billion tokens are already out of circulation.
Is LUNC heading down?
Despite the recent market revival for LUNC certain technical indicators show that LUNC’s price rally is at risk of correcting shortly. Indeed, LUNC’s daily relative strength index (RSI) reached a score of 90 on September 8, which often leads to a severe price correction.
Furthermore, despite the uptick, trading volumes are still lows, suggesting traders are still not finding enough arguments to remain on the LUNC train for a long time.
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